GBP/USD stays focused on 1.2370 – UOB

FX Strategists at UOB Group noted the 1.2370 level in Cable looks increasingly vulnerable.

Key Quotes

24-hour view: “Our expectation for GBP to ‘edge above 1.2565’ was wrong as it sold-off sharply to an overnight low of 1.2415. Downward momentum has picked up quickly and the bias from here is for GBP to weaken further. That said, the major support at 1.2370 could be out of reach for today. The next support below 1.2370 is at 1.2335. On the upside, only a move above 1.2480 would indicate the current downward pressure has eased (minor resistance is at 1.2450).”

Next 1-3 weeks: “The rapid manner by which GBP gave up most of its gains from Tuesday was not exactly expected. Our latest narrative from earlier on Tuesday (23 Jun, spot at 1.2485) was that GBP could “edge higher but any advance is viewed as part of a 1.2370/1.2610 range”. For now, there is no change in our view but after yesterday’s price action, the 1.2370 support appears to be vulnerable. Looking ahead, a clear break of this level would suggest GBP could weaken further to 1.2300. At this stage, the prospect for such a move is not high but it would continue to increase unless GBP moves and stays above 1.2520 within these 1 to 2 days.”